Forex, or the foreign exchange market (also called FX for short) is the marketplace where currencies are traded. At its simplest, a foreign exchange transaction might be, for example, when you transfer your local currency to a new one for an upcoming holiday. Across the market as a whole, an estimated 5.3 billion USD is traded every day between governments, banks, corporations, and speculators.

The EUR/USD pair is closing a second consecutive week with gains at around 1.1070, retreating from a high at 1.1109. A scarce macroeconomic calendar kept the pair in a dull range during the first half of the week, also the wait and see stance ahead of the ECB monetary policy decision on Thursday. One done, one to go, as the US Federal Reserve will be announcing its decision on monetary policy next Wednesday, September 18.


Spot for most currencies is two business days; the major exception is the U.S. dollar versus the Canadian dollar, which settles on the next business day. Other pairs settle in two business days. During periods that have multiple holidays, such as Easter or Christmas, spot transactions can take as long as six days to settle. The price is established on the trade date, but money is exchanged on the value date.

As mentioned earlier, in a long trade (also known as a buy trade), a trader will open a trade at the bid price, and will aim to close the trade at a higher price, making a profit on the difference between the opening and closing value of the currency pair. So if the EUR/USD bid price is 1.16667, and the trade closes at the price of 1.17568, the difference is 0.00901, or 90.1 pips. (When trading a single lot, that would make a 901 USD profit).
U.S. President, Richard Nixon is credited with ending the Bretton Woods Accord and fixed rates of exchange, eventually resulting in a free-floating currency system. After the Accord ended in 1971,[31] the Smithsonian Agreement allowed rates to fluctuate by up to ±2%. In 1961–62, the volume of foreign operations by the U.S. Federal Reserve was relatively low.[32][33] Those involved in controlling exchange rates found the boundaries of the Agreement were not realistic and so ceased this[clarification needed] in March 1973, when sometime afterward[clarification needed] none of the major currencies were maintained with a capacity for conversion to gold[clarification needed], organizations relied instead on reserves of currency.[34][35] From 1970 to 1973, the volume of trading in the market increased three-fold.[36][37][38] At some time (according to Gandolfo during February–March 1973) some of the markets were "split", and a two-tier currency market[clarification needed] was subsequently introduced, with dual currency rates. This was abolished in March 1974.[39][40][41]
A swap trade involves both. Dealers buy a currency at today's price on the spot market and sell the same amount in the forward market. This way, they have just limited their risk in the future. No matter how much the currency falls, they will not lose more than the forward price. Meanwhile, they can invest the currency they bought on the spot market.
The number quoted for these prices is based on the current exchange rate of the currencies in the pair, or how much of the second currency you would get in exchange for one unit of the first currency (for instance, if 1 EUR could be exchanged for 1.68 USD, the bid and ask price would be on either side of this number). Learn more about Forex quotes in this article: Understanding and Reading Forex Quotes.

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Similarly, if you wanted to purchase 3,000 USD with Euros, that would cost 2,570 EUR. With a leverage rate of 1:30, however, you could access 3,000 USD worth of the EUR/USD currency pair as a CFD with just 100 USD. The best part, however, is that the size of the potential profit a trader could make is the same as if they had invested in the asset outright. The risk here is that potential losses are magnified to the same extent as potential profits.


Knowing how the industry is mapped out is important, because the collective combination of all participants creates the market you trade in. The relative weight of the trading party to the market is measured by how much money that party manages – from billion dollar hedge funds and investment banks, to private traders with a few thousand dollars in action.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
The EUR/USD pair is closing a second consecutive week with gains at around 1.1070, retreating from a high at 1.1109. A scarce macroeconomic calendar kept the pair in a dull range during the first half of the week, also the wait and see stance ahead of the ECB monetary policy decision on Thursday. One done, one to go, as the US Federal Reserve will be announcing its decision on monetary policy next Wednesday, September 18.

Understand your risk tolerance: Every person has a different level of risk tolerance, and this will influence the size of the chances they take, the losses they are willing to experience, and the psychological effect of them. To manage your stress levels while trading, it's important to consider your level of risk tolerance in advance, and choose trading strategies that support this.
By contrast, the Australian Dollar, the New Zealand Dollar and the Japanese Yen tend to be more active between 00:00 and 08:00 GMT. As a trader, this means you can trade whenever it suits you - if you work during the day, there will be currencies available to trade before or after work. If you have children but are at home during the day, you can simply choose a different currency. In the Forex market, you can trade 24 hours a day, 5 days a week.
Investment management firms (who typically manage large accounts on behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.
Now you know the what, the why, and the how of Forex trading. The next step to to create a trading strategy. For beginner traders, the ideal scenario is to follow a simple and effective strategy, which will allow you to confirm what works and what doesn't work, without too many variables confusing things. Fortunately, banks, corporations, investors, and speculators have all been trading the markets for decades, which means there is already a wide range of Forex trading strategies to choose from. These include:

Managing your money in Forex trading comes down to the specific measures you use to increase your profits, whilst also minimising potential losses. Successful Forex trading has far more to do with effective money management than having a handful of good trades, and is one of the secrets that separates those who successfully trade FX over the long term, from those who give up after a couple of trades.

Trading psychology is by far, the most overlooked aspect of profitable trading.  To say it another way, you can use many strategies to turn a consistent profit, but you cannot trade profitably if you have yet to master the emotional side of trading. There is no exception to that rule. You cannot turn a profit while revenge trading. You cannot turn a profit if you’re over-leveraging and doubling down to
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Experts say that forex is a zero-sum game. That means that someone always loses commensurate to someone else’s win — that’s how the game is played. When you add in costs and fees associated with running a forex account and making trades, you enter negative-sum territory. That said, shrewd trading moves can pay out. Substantially. If you have the time and interest required to learn to identify patterns in price fluctuations and execute far-sighted trades, you will make wins on the forex market. That said, the most thoughtful strategy is also liable to bring about loss. Don’t trade more than you can afford to lose.
Unless you understand the code it's written in, you're probably not going to be able to adapt your EA to work with those changes. If you are one of the many traders who believe that an EA would outperform the market, then perhaps you should give it a try with the MetaTrader Supreme Edition plugin. And perhaps best of all, we offer EAs free of charge for traders!
An important part of the foreign exchange market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have a little short-term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational corporations (MNCs) can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.
Leverage: Leverage is capital provided by a Forex broker to bolster their client's trading volume. For example, if you use a 1:10 rate of leverage and have $1,000 in your trading account, you can trade $10,000 worth of a currency pair. If the trade is successful, leverage will maximise your profits by a factor of 10. However, please note that leverage also multiplies your losses to the same degree, so it should be used with caution. If your account balance falls below $0, you may trigger a broker's negative balance protection settings (if trading with an ESMA regulated broker), which will result in the trade being closed. Fortunately, this means that your balance cannot move below $0, so you will not be in debt to the broker.

The main participants in this market are the larger international banks. Financial centers around the world function as anchors of trading between a wide range of multiple types of buyers and sellers around the clock, with the exception of weekends. Since currencies are always traded in pairs, the foreign exchange market does not set a currency's absolute value but rather determines its relative value by setting the market price of one currency if paid for with another. Ex: US$1 is worth X CAD, or CHF, or JPY, etc.
Just like stocks, you can trade currency based on what you think its value is (or where it's headed). But the big difference with forex is that you can trade up or down just as easily. If you think a currency will increase in value, you can buy it. If you think it will decrease, you can sell it. With a market this large, finding a buyer when you're selling and a seller when you're buying is much easier than in in other markets. Maybe you hear on the news that China is devaluing its currency to draw more foreign business into its country. If you think that trend will continue, you could make a forex trade by selling the Chinese currency against another currency, say, the US dollar. The more the Chinese currency devalues against the US dollar, the higher your profits. If the Chinese currency increases in value while you have your sell position open, then your losses increase and you want to get out of the trade.
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